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India Inc. not sanguine about growth

GS Paper 3:

Topics covered: Indian economy- issues related to growth and mobilization of resources

 

Context: A recent poll survey result conducted by Confederation of Indian Industry (CII) involving the CEO of companies

Observations made through this survey:

    • Growth expected by the government and RBI: The central bank has recently downgraded its GDP growth projection for the year to 9.5% from 10.5% earlier, while the Chief Economic Advisor Krishnamurthy Subramanian expects growth to be at 11% as estimated in the Economic Survey.
    • Nearly two-thirds of CEOs of large corporates polled by CII at its national council meeting earlier this month expect India’s GDP growth in 2021-22 to be 9% or less.
  • Just 12% of CEOs expect growth to be over 10%, while 20% expect GDP to grow at 8% or less than 8%. As many as 44% of CEOs expect growth to be between 8% and 9%, while 23% expect it to hit the 9%-10% range
  • The poll survey shows that CEOs of industries believe that inflation in the present economy is not a transient problem has made out by the government. Just 33% CEOs expect average retail inflation during the year to cool off from the present level (5.6% in July), while 67% expect it to be uncomfortably close to or beyond the RBI’s monetary policy tolerance threshold of 6%. 
  • The poll survey also indicated that significant amount of CEOs felt that the cost of doing business presently is high in the country. 32% also blamed the high cost of doing business in the country
  • Other reasons for low investment as the survey include– lack of animal spirits, ease of doing business remains cumbersome at the ground level, 33% of the CEOs said fresh investments were not in the offing as current capacities exceed demand

About CII

The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.

CII is a non-government, not-for-profit, industry-led and industry-managed organization, with over 9000 members from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 300,000 enterprises from 294 national and regional sectoral industry bodies.

For more than 125 years, CII has been engaged in shaping India’s development journey and works proactively on transforming Indian Industry’s engagement in national development. CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues.

As India marches towards its 75th year of Independence in 2022, CII, with the Theme for 2021-22 as Building India for a New World: Competitiveness, Growth, Sustainability, Technology, rededicates itself to meeting the aspirations of citizens for a morally, economically and technologically advanced country in partnership with the Government, Industry and all stakeholders

 

Prelims link

  1. What is CII?
  2. Important activities or initiatives taken by them?
  3. What is inflation?
  4. Inflation targeting approach of RBI

Mains link

  1. Major issues Indian companies are facing in the present scenario and steps that needs to be taken to overcome these issues